What are the different types of compensation strategies?

What are the compensation strategies?

A compensation strategy communicates to employees the definition of the organization’s position regarding pay, and typically includes a definition of external competitive market and internal equity objectives, definition of pay programs that will be utilized and why, and information about how plans will be administered …

What are the 4 types of compensation?

The Four Major Types of Direct Compensation: Hourly, Salary, Commission, Bonuses. When asking about compensation, most people want to know about direct compensation, particularly base pay and variable pay.

What are the different types of compensation system?

Compensation System – 5 Important Types: Piece Rate System, Commission System, Bonus System, Skill-Based System and Merit Pay System

  • Piece rate system.
  • Commission system.
  • Bonus system.
  • Skill-based system.
  • Merit Pay system.

What is an example of the compensation strategy?

One way to establish a framework for compensation is to determine pay grades based on job position and duties. For example, positions in pay grade one may be for entry-level roles, pay grade two for technician roles, pay grade three for managers, and pay grade four for executives.

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What are all the three basic compensation strategies in HRM?

Types of Compensations

  • Direct Compensation. It is naturally made up of salary payments and health benefits. …
  • Indirect Compensation. It focuses on the personal encouragements of each individual to work. …
  • Wages and Salary. …
  • Allowances. …
  • Incentives and Performance Based Pay. …
  • Fringe Benefits/Perquisites.

What are the 3 types of compensation?

Different types of compensation include:

  • Base Pay.
  • Commissions.
  • Overtime Pay.
  • Bonuses, Profit Sharing, Merit Pay.
  • Stock Options.
  • Travel/Meal/Housing Allowance.
  • Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes…

What are the two types of employees compensation?

There are two basic types of compensation: direct and indirect. Direct pay is the wage or salary received by the employee; indirect pay consists of various employee benefits and services.

What are the different methods of compensation used in retail?

Here are some of the most commonly implemented types of sales commission plans used today:

  • Straight Salary/No Commission. …
  • Salary Plus Commission. …
  • Commission Only. …
  • Draw Against Commission. …
  • Profit Margin. …
  • Territory Volume. …
  • Capped Commission. …
  • Performance Gate.

What is the role of HR strategy in compensation strategy?

Derived from the HR Strategy and it defines the position of the organization on the job market, the main bonus principles in the organization and rules for the base salary setting. The compensation strategy is the strategy, which is approved by the Board of the organization.

What is compensation strategy formulation process?

A compensation strategy lays out your organization’s point of view on how you will determine pay and benefits for employees. It aligns all of your compensation resources to your business goals, helps you decide where you want to compete, how competitive you need to be and what you choose to reward.

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